In a bid to kick start a sluggish property market, would-be homebuyers in Queensland are being given the opportunity to live in their dream home before they buy it.
Under the “try before you buy” deal house hunters can live in the new digs for a small fee while their existing home is on the market, with the option of moving back out if it doesn’t sell.
It’s considered a risky move for developers, which typically avoid “subject to sale” contracts.
But one selling agent for a “try before you buy” complex on Queensland’s Sunshine Coast said the deal was designed to make the transition from former home to new home simpler in a market where buyers are holding off because they struggle to sell their existing home.
“We came up with this as a lifestyle purchasing option, where you can occupy the unit – and the developer will fully furnish it – therefore you can have your own house looking its best with all its furniture while it’s on sale,” Rick Williams, director of PRDnationwide Buderim, told News Ltd.
“And if you don’t sell your property due to market issues, you’re free to go back to the other property.”
The catch? The deal is open to genuine buyers only and is valid for 60 days.
Buy or sell first, which is best?
In an ideal world, homeowners would sell their existing property at exactly the same time as buying a new one. But unfortunately, it rarely happens that way. Most people have to either sell first or buy first.
There are stresses that come with both options; if you sell first you might feel pressured to buy somewhere else that is not quite right.
Buy before you sell your existing home and you could be left saddled with two mortgages or a bridging loan.
Lisa Montgomery, chief executive of Resi Mortgage Corporation, told Money magazine that buying before selling can be considered breaking the cardinal rules of purchasing property.
“Have you spoken to you lender? And do you have the financial backing to allow you to buy before selling? You need to make sure you have a finance clause in your contract for the purchase, otherwise you’re taking a big risk,” she said.
Most lenders offer bridging loans to enable borrowers to purchase another property before selling their existing one. These loans allow them to unlock equity in their current home while minimising the overall loan repayments on the total debt.
But they can be expensive, which is why the “try before buy” deal may be a drawcard for some homeowners who want to move on to a new property, said Michelle Hutchison, spokeswoman for RateCity.
“For those lucky enough to take up a “try before you buy” offer, it’s a good idea to take advantage of the extra 60 days and use that time to get organised, sort your finances and spend time researching the home loan market. Use RateCity to compare home loans and find a good value deal as it could save you thousands of dollars.”